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Income Tax Appellate Tribunal, MUMBAI BENCH “I”, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The present appeal has been preferred by the Revenue against the order dated 15.01.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2010-11.
The various grounds raised by the Revenue are as under:
“On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made on account of additional income admitted by the assessee in the statement recorded in the course of survey proceedings at the business premises of the assessee. In this regard, by negating the statement given by Partner and Architect of the assessee firm, the Ld. CIT(A) has erred in appreciating the fact that the Architect of the assessee is the person who was having full knowledge of the correct status of work done in the project of the assessee and the Partner, before making admission of additional income, was fully aware of the financial implications of the statement given by the architect.
2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made by the AO on account of 2 M/s. Sai Anand Construction difference in rate applied by the assessee in sale of residential units in his project as he has failed to apply the ratio of the order of the jurisdictional Bombay High Court in the case of M/s Mont Blanc Properties & Industries P Ltd Vs ITO.
3. On the facts and circumstances of the case, the Ld.CIT(A)erred in deleting the addition of Rs.50,00,000/- made u/s 68 of IT Act, as there was no cash balance in the books of assessee which was submitted before the AO in the course of assessment proceedings. In this regard, Ld. CIT(A) erred in accepting the submission of assessee at the appellate stage that the amount was paid directly by the partners, not by the assessee firm.”
The facts in brief are that the assessee is a partnership firm engaged in the business of construction of project “ Sai Tirth” under SDR and filed return of income declaring total income of Rs.35,36,250/- on 29.09.2010. A survey action was conducted on 18.02.2010 on the assessee firm during which the assessee admitted and surrendered additional income of Rs.3 crores over and above the normal business income. The assessee did not show the said income in the return of income for the reasons that it was a forced and coercive admission taken from the partner in the assessee firm. The case of the assessee was selected under CASS for scrutiny. Thereafter the assessment was framed by the AO after several rounds of hearing vide order dated 26.03.2013 u/s 143(3) of the Act assessing the income of the assessee at Rs. 6,37,76,448/- by making various additions.
The issue raised in ground No.1 is against the order of Ld. CIT(A) deleting the addition of Rs.3 crores made by the AO on account of additional income admitted by the assessee in the statement recorded during the course of survey proceedings.
4.1 The facts in brief are that during the course of survey, statements of Mr. Dharam Kataria main partner of assessee, Architect Shri Arvind Khare and Shri Prakash Tilwani (Sole Selling Agent) were recorded. Shri Dharam Kataria was asked to explain the details of project “Sai Tirth”, Siddharth Nagar, Thane (E). The said partner of the assessee was asked to explain the 3 M/s. Sai Anand Construction source of investments in the project, sales , cost of construction, exact work in progress on the basis of percentage completion of the project and also the difference between the actual work in progress as recorded in the books of the assessee and work in progress as per percentage completion method. The survey team calculated the total work in progress at Rs.47 crores whereas the assessee has accounted in the books of accounts the work in progress to the tune of Rs.44 crores and accordingly Mr. Dharam Kataria accepted the difference of Rs.3 crores to be on account of unaccounted expenses in the books of accounts during the course of recording of statement in survey proceedings. A diary was also found during the course of survey which according to the assessee was prepared on the instruction of the survey team. However, the assessee did not offer the same in the profit and loss account as admitted during the course of survey. It was stated vide letter dated 22.03.13 that Mr. Dharam Kataria was one of the partners in the assessee firm and gave the statement in an intense state of mind. The architect of the assessee whose statement was recorded during the survey was not a competent person to make the statement as to the cost of the construction. It was also alleged that the survey team did not carry out any measurements at the project site and whatever calculations were made to get the surrender of Rs. 3.00 Cr were without any basis. The contention of the Ld. A.R. was not accepted by the AO and noted that Mr. Dharam Kataria was the person who has overseen the construction of the project in the assessee firm and cannot be said to be not aware of the cost and volume of the work in progress and accordingly added Rs.3.00 Cr to the total income of the assessee.
In the appellate proceedings, Ld. CIT(A), after considering the submissions and contentions of the assessee deleted the addition by observing and holding as under: “32. I have gone through the submissions and the contents of the alleged note book. The relevant entries are reproduced herewith:
4 M/s. Sai Anand Construction Page No.8 15.00 TM 10.00 TAH 10.00 SEL 10.00 POL KOP 10.00 MANS Page No.6 5.00 POP-P-Comls. 5.00 PO-P-MCP 5.00 PO-P-SS 10.00 JM 10.00 PO-COK Page No.5 15.00 LOK Cr. 10.00 MUM-Ebc. 10.00 PO-UTSV 15.00 OTH 15.00 LOC-UTS Page No.4 15.00 TM 10.00 SCO 15.00 TAH 15.00 MANT PageNo.3 10.00 PO-P-CONT. 10.00 PO-PNCP PageNo.2 10.00 POP-HSS 10.00 MON-ELC 10.00 LOK-ELE. Page No. 1 15.00 R-ELE
The contents of the diary, as reproduced above, make it evident that the noting are inchoate and incomprehensible. It is almost impossible to detect from the said noting as to what kind of transactions are noted therein. The names of the parties cannot be comprehended. Even the purpose of making the payment is impossible
5 M/s. Sai Anand Construction to detect. It is even more surprising that no questions were asked during the course of survey about the contents of the diary and the meaning which could be ascribed to the contents. Question Nos.119 & 20 were directed towards the said diary, which gives reference to the figures written therein and the code words written alongwith the figures. In the answer to question No.19, Shri Dharam Kataria stated that these are certain expenses which were incurred in cash for the Sai Tirth project, which cannot be recorded due to the nature of payments as they pertained to certain unofficial payments which are not permissible to be accounted for. However, curiously in the answer to immediately following question No.20, Shri Dharam Kataria stated that the total of noting contained in the diary produced by the survey team, is the same as the difference worked out in his answers to Question Nos.16 and 17 reproduced supra. There is an apparent dichotomy in the above answers. On the one hand, the authorised officer has believed the contention that the aforesaid payments are of a nature of unofficial payments which cannot be recorded in the books of account, the very next answer which states impliedly that the noting contained the figure of difference worked out for calculating the work in progress, has also been accepted. In fact, the assessing officer has also accepted that the above noting reflect the excess work in progress. No questions in respect of this dichotomy has been put to the assessee. It is indeed surprising that no question has been asked about the meaning of the said entries in the diary. Nothing has been asked about the authorship of the diary. In any case it has already been held that the statement given on oath, during the course of survey u/s.133A does not have any evidentiary value. It appears to me that the above diary, even if taken to be found during the course of survey, is a dumb document which cannot be relied upon.
In view of the above discussion, I hold that the addition of Rs.3 crores on account of the statement given by Shri Dharam Kataria during the course of survey, is incorrect and ought to be deleted. I direct the assessing officer accordingly. Ground Nos.2 & 3 are allowed.”
The Ld. CIT(A) deleted the addition of Rs. 3.00 Cr on the ground that the statement made by the assessee during the course of survey proceedings was not corroborated by any underlying materials/evidences detected during the course of survey proceedings or corroborated by the books of accounts of the assessee and therefore, the said statement during survey has no evidentiary value. Reliance was made in the case of CIT vs. S. Khader Khan Son 300 ITR 157 (Madras-HC) which was also affirmed by the Hon’ble Supreme Court vide order dated 20.09.2012.
The Ld. D.R. vehemently submitted before the Bench that the Ld. CIT(A) has completely erred in law and on facts in deleting the addition of 6 M/s. Sai Anand Construction Rs.3.00 crores which was based upon the statement of the partner Mr. Dharam Kataria who was looking after the construction work and was fully conversant with the business affairs such as cost of the work in progress etc. Moreover, the said statement has the backing of the further statement of the architect of the assessee Mr. Arvind Khare and a diary which was found during the course of survey proceedings in which the expenses of Rs.3 crores were recorded/stated. The arguments of the assessee before the first appellate authority that the diary was fabricated at the instruction of the Assistant Commissioner of Income Tax was also wrong and without any basis. The Ld. D.R. contended that had the diary been fabricated, the partner of the assessee Mr. Dharam Kataria and the architect Mr. Arvind Khare would not have admitted all the differences between the work in progress as stated in the books of accounts and as calculated at the time of survey which was on account of unrecorded expenses by the assessee in the books of accounts. The Ld. D.R. further submitted that Mr. Dharam Kataria himself calculated the value of total work in progress of Rs.47.00 crores as against Rs.44.00 crores accounted in the books of accounts. The Ld. D.R. also stated that the AO has rightly made the addition of Rs.3.00 crores to the total income of the assessee which is of enough evidentiary value. Finally, the Ld. D.R. prayed that the order of the Ld. CIT(A) on this point be reversed by restoring the addition made by the AO.
The Ld. A.R., on the other hand, vehemently opposed the argument given by the Ld. D.R. by submitted that the addition was purely based upon the statement of Mr. Dharam Kataria partner of the assessee, Mr. Arvind Khare architect of the assessee and on the basis of the diary which was fabricated and created on the instruction of the survey team. The Ld. A.R. submitted that the partner of the assessee was coerced to make the surrender. It was also stated by the Ld. A.R. that no discrepancy was found in the books of the accounts and also the cash physically available and cash balance as per cash book. The Ld.
7 M/s. Sai Anand Construction A.R. also submitted before the Bench that the Additional Commissioner threatened the assessee to make surrender and yield to the demands of the survey team failing which the survey will be converted into search. The assessee also filed the affidavit of the architect stating that the statement pertaining to cost of construction was not given voluntarily which was filed as additional evidence before the Ld. CIT(A) under rule 46A and it was also stated in the said affidavit that the full activity of the architect was engineering and architecture and he had no knowledge about the prevailing cost of construction in Thane region wherein the project of the assessee was located. It was also stated that the cost of the construction of the assessee was Rs.14,131/- per sq. mtr. which is far more than the notified cost of construction. The Ld. A.R. submitted that the statement of the Mr. Dharam Kataria was recorded and a forced surrender was obtained by the survey team . The ld counsel for the assessee submitted that Rs.3 crore was not offered as income when it was found that there was no discrepancy in the books of accounts by relying on the CBDT circular No.286/2/2003 dated 10.03.03 and 286/98/2013 dated 18.12.14. The Ld. A.R. also filed the notified cost of construction in Thane region in different years and submitted that the cost of the assessee was more than 33.83% higher than the notified cost. The Ld. A.R. submitted that in such circumstances there is no basis for calculating at cost which higher than the notified/ready recknor rate as there is no justification for coming to the conclusion that the value of work in progress understated in the books of accounts. The Ld. A.R. relied heavily on a couple of decisions namely (1) Paul Mathew & Sons vs. CIT reported in 129 Taxmann 416(Ker) and CIT vs. S. Khader Khan Son 300 ITR 157 (Madras- HC). The Ld. A.R also submitted that the SLP filed in the case of CIT vs. S. Khader Khan Son (supra) has been dismissed by the Hon’ble Supreme Court vide order dated 20.09.12. Finally, the Ld. A.R. prayed that in view of the above facts and the ratio laid down by the Apex Court and the High Courts the order of the Ld. CIT(A) is totally reasoned order and should be upheld.
8 M/s. Sai Anand Construction 9. We have heard the rival submissions and perused the relevant material on record including the decisions relied upon by both the parties. The undisputed facts of the case are that a survey was carried out on the assessee during which statements of one of the partners Mr. Dharam Kataria and architect Mr. Arvind Khare of the assessee firm were recorded and the during the course of the survey the cost of work in progress as recorded in the books of accounts was Rs. 44.00 Cr whereas work in progress as calculated by applying percentage completion method worked out to Rs.47.00 crores. A diary was also seized by the survey team as according to the assessee was fabricated at the instance of survey team. Ultimately a surrender of Rs.3.00 crores was made in the statement recorded during survey. It was also alleged that a diary was found during the survey which the assessee alleged that it was fabricated and created at the instruction of survey team and did not belong to the assessee. The said surrender was not offered to tax in the return of income filed by the assessee for the instant year as the assessee withdrew the statement of his partner Mr. Dharam Kataria by submitting that the surrender was obtained by coercion and the partner was not in healthy and sound state of mind during the course of survey and same was obtained under pressure and under intense state of mind. We also note that the AO could not find any discrepancy in the books of account by the assessee during the course of the assessment proceedings. Besides, the surrender of Rs.3.00 crores is not corroborated by any materials/evidences or discrepancy in the books of accounts except the diary which has been alleged by the assessee to be false and recreated at the instance of survey team at the time of survey. According to the assessee , the modus operandi of such false fabrication came to light when a similar survey was carried out by the same officials at another business premises and the whole modus operandi came to light when the officers were caught red handed by the CBI. Under these circumstances and based on the above facts, we are of the view that the surrender of Rs. 3.00 Cr by the assessee is not corroborated by the findings the AO during the course of 9 M/s. Sai Anand Construction assessment proceedings except the statement of Mr. Dharam Kataria and calculation made at the time of survey. In our opinion, the order of the Ld. CIT(A) is correct and does not require our interference as it has been rightly followed the ratio laid down by the Hon’ble Madras High Court in the case of CIT vs. S. Khader Khan Son (supra) in which the SLP filed by the department stands dismissed by the Hon’ble Supreme Court vide order dated 20.09.2012 and also the ratio laid down by Hon’ble Kerala High Court in the case of Paul Mathew & Sons vs. CIT (supra). In view of the above facts and the ratio laid down by the various courts, we are inclined to uphold the order passed by the Ld. CIT(A). Resultantly, the ground raised by the Revenue is dismissed.
The issue raised in the second ground of appeal is against the deletion of addition of Rs.68,23,300/- by Ld. CIT(A) as made by the AO on account of difference in rates at which the assessee sold the residential units in the project.
The facts in brief are that during the course of assessment proceedings, the AO noticed that there were variations in the rates at which the flats were sold by the assessee to various buyers and accordingly assessee was asked to explain the as to why the said variations have occurred. In response, the assessee submitted the details as t osales of flats which are reproduced as under: List of members as per booking date Sr. Booking Flat No. Name of the Area Rate Amount No. Date Party 1. 19.11.2005 B-1103 Niranjan M. 1540 1701 26,19,540/- Sadhwani 2. 11.04.2006 A-401 Aarti Amol 1540 2300 35,42,000/- Pawar 3. 15.04.2006 B-1201 Ashna B. 1185 1800 21,33,000/- Jethani 4. 23.04.2006 B-1104 K. 1250 2700 33,75,000/- Gowthaman 5. 22.09.2009 B-1301 Sushelkumar 1185 3600 42,66,000/- A. Wankhedkar
The AO observed that flat No.A-401, B-1201 & B-1104 were booked in the month of April 2006 within 13 days. Flat No. B-1104 was booked at Rs.2700/- per sq. ft. but B-1201 and A-401 were booked at Rs.1800/- and Rs.2300/- per sq. feet respectively. Similarly, flat No.B-1301 was booked in the month of September 2009 at Rs.3600 per sq. feet whereas flat No.A-202 was booked at Rs.2088 per sq. feet. Thus ,the AO calculated the total differential amount at Rs.68,23,300/- as per details below and added the same to the total income of the assessee: 1) Flat A- Area 1540 Sq. Feet x (Rs.2700 – Rs.2300) = Rs.6,16,000/- 401 2) Flat B- Area 1185 Sq. Feet x (Rs.2700 – Rs.1800) = Rs.10,66,500/- 1201 3) Flat A- Area 3400 Sq. Feet x (Rs.3600 – Rs.2088) = Rs.51,40,800/- 202 Total Amount Rs.68,23,300/-
In the appellate proceedings, the Ld. CIT(A) deleted the addition by observing and holding as under: “26. In the case of Commissioner of Income-tax, Rajkot -III Vs. M.P. Scrap Traders [2015] 372 ITR 507 (Gujarat) the Assessing Officer made addition in hands of assessee-firm as well as its partner, as unexplained investments solely relying upon statement of partner recorded at time of survey which was subsequently retracted. Except said statement, there was no other material or corroborative material with Assessing Officer to justify said addition. It was held that the additions made by Assessing Officer were to be deleted.”
The Ld. D.R. argued before the Bench that the Ld. CIT(A) has completely misappreciated the facts while deleting the addition of Rs.68,23,300/-. The Ld. D.R. submitted that the flats were sold at the different rates and assessee could not submit any justification for selling the flats at different rates during same period and also could not explain the reason for 11 M/s. Sai Anand Construction such variations. The DR argued that the differential amount was on money received by the assessee and therefore, AO has rightly brought the on money to tax by making addition of Rs.68,23,300/-.
On the other hand, the Ld. A.R. vehemently countering the arguments of the Ld. D.R. submitted that the addition made by the Ld. CIT(A) was based upon the presumptions and surmises that assessee received on money by selling these flats at different prices. The Ld. A.R. submitted that in all these cases these flats were sold at higher than the stamp valuation rates i.e. ready recknor rates and none of the flats was sold below the said rates. The Ld. A.R. contended that the Revenue has no evidences whatsoever to show that assessee has made the sales of the flats at a higher rate than the sales consideration. It was stated by the Ld. A.R. that the rates at which the flats were sold were reached after a lot of negotiation and depending upon the circumstances of each case. The Ld. A.R. also furnished before the first appellate authority the ready recknor rates as applicable in various calendar years by way of additional evidences under section 46A. It was also argued that the Act does not authorize the government to compute the income based on presumptive rates. The Ld. A.R. also drew our attention to the provision of section 50C of the Act which provides for substitution of deemed sale consideration in place of actual sales consideration where the actual consideration is below the ready recknor rates. The Ld. A.R. also took us through the provisions of section 43CA of the Act which are applicable w.e.f. A.Y. 2014-15 and apply to transfer of assets where the sales were made lower than the ready recknor rates and thus there is no provision in the Act which provides for substitution of higher rates as deemed consideration rates in place of the ready recknor rates. Moreover, no incriminating evidences were found during the course of survey as regards the so called understatement of sale consideration and therefore, the addition as deleted by the first appellate authority deserved to be affirmed. The Ld. A.R. placed reliance on the decision of Hon’ble Supreme Court in the 12 M/s. Sai Anand Construction case of K.P. Varghese vs. ITO and Another [1981] 131 ITR 597W (SC). Finally, the Ld. A.R. prayed that the addition made by the AO was unwarranted which was rightly deleted by the Ld. CIT(A) and therefore, the appeal of the Department on this issue should be dismissed.
We have heard the rival submissions and perused the material on record including the impugned order. We find that the sales of flats were sold by the assessee at different rates in the same period . However, in some cases, the sale rate varies from flat to flat which were effected in the same period but all the sale rates in all cases were above the ready recknor rates. Moreover, as the records before us reveal that no incriminating evidence was found during the course of survey proceedings which corroborated the selling of flats at lower rate that what has been stated in the books of accounts could lead to the presumption that assessee has received money in the sale of flats. Thus, under these circumstances, we find that the department has no evidence in its possession to show that the addition as has been calculated and made by the AO of Rs.68,23,300/- in respect of varied sale rates are understated. Thus we do not find any fault in the order of the Ld. CIT(A) . Moreover, the case of the assessee is also supported by the decision of Hon’ble Supreme Court in the case of K.P. Varghese vs. ITO and Another (supra) in which the Apex Court has held that provisions of sub section (2) of section 52 of the Act can be invoked only where the consideration for transfer of capital assets has been understated by the assessee and the burden of proving the understatement or concealment is on the Revenue. The sub section has no application in case of an honest and bonafide transaction where consideration received by the assessee has been factually disclosed and declared. We are, therefore, of the opinion that the order of Ld. CIT(A) needs to be sustained on this issue and accordingly the appeal of the Revenue on this ground is dismissed.
The issue raised in ground No.3 is as regards deletion of addition of Rs.50 lakhs by Ld. CIT(A) as made by the AO under section 68 of the Act on
The facts in brief are that the AO noticed from the form No.3CB of tax audit report of the assessee as submitted that during the assessment proceedings that assessee has paid a sum of Rs.50 lakhs cash to the office of the Income Tax Department and same has been shown as miscellaneous expenditure under the head current assets. Accordingly, the Ld. A.R. was asked vide order sheet entry dated 18.03.13 to submit cash flow and fund flow from 01.02.10 to 31.03.10 to prove the payment of Rs.50 lakhs which was reported in form No.3CB which was duly submitted by the Ld. A.R.. The AO observed that from the said details submitted by the assessee that was no entry of Rs.50 lakhs appearing in the details filed and accordingly the AO added the said amount as unaccounted cash credit under section 68 of the Income Tax Act.
In the appellate proceedings, the Ld. CIT(A) deleted the addition after considering the various contentions of the assessee by observing and holding as under: “28. The addition made by the Assessing Officer is entirely out of place. The amount under consideration is not an incoming but an outgoing. It was therefore not a case of cash credit but of expenditure. Since the amount was unadjusted debit balance, it was reflected under the head "Current Assets”. Copy of Balance Sheet and Profit & Loss Account is enclosed at Page Nos 150 to 173 of the Paperbook. The amount of Rs. 50 lacs, paid by way of bribe was not claimed as deductible expenditure by debiting Profit and loss account and therefore there is no scope of disallowance. The amount of Rs. 50 lacs was paid on different dates as under:
Sr. No. Date Amount (Rs.) 01. 22/02/2010 10,00,000.00/- 02. 24/02/2010 10,00,000.00/- 03. 02/03/2010 15,00,000.00/- 04. 08/03/2010 15,00,000.00/- Total 50,00,000.00/-
14 M/s. Sai Anand Construction 29. The payment was made from out of the cash balance lying in the books. Copy of cash book of the firm is enclosed at Page Nos 174 of the Paperbook. The cash balance was built up on the basis of advances made by the partners. The appellant as also the partners has not raised any loans from anyone for building up the cash balance out of which payment was made. It is therefore absolutely clear that the assessee has not claimed any deduction of liability in respect of the payment of Rs. 50 lacs made. Further, no loans have been raised to built up the cash balance to enable the payment. In the circumstances there is absolutely no case for the impugned addition of Rs. 50 lacs and the same requires to be deleted. Reliance for this is placed on order of Hon'ble Tribunal Mumbai Bench in the case of ITO vs M/s Growel Energy Co Ltd reported at 33 ITR (Tribunal) 1 (Page No 279 to 293 of the Paperbook). The relevant extract is reproduced below.
"The assessee was engaged in the business of developing, building and implementing hydroelectric projects on build-own-operate basis. For the previous year relevant to the assessment year 2007-08, under the head 'capital work-in- progress' the assessee showed gross expenditure on account of professional fees paid. The Assessing Officer treated it as expenditure on account of professional fees paid. The Assessing Officer treated it as unexplained expenditure within the meaning of section 69C of the Income- tax Act, 1961 and held that merely because tax was deducted at source on the payment it did not automatically lead to justification of the purpose and the assessee had to establish the purpose, genuineness and bus ine ss ex pedienc y of suc h ex penditure . The Commissioner (Appeals) held that the assessee explained the source of the expenditure and the case fell outside the ambit of section 69C of the Act. On appeal:
Held, dismissing the appeal, that the Assessing Jas wrongly applied section 69C of the Act. The Commissioner (Appeals) was justified in deleting the addition. Also, no material was placed to show under which provision of law the addition could be made when it was not claimed as business expenditure but was added to the capital work- in-progress.”
The Ld. D.R. argued that the addition of Rs.50 lakhs was rightly made by the AO on the basis of tax audit report in form No.3CB which was further fortified by the details filed by the assessee which contained no entry of Rs.50 lakhs. The Ld. DR argued that the CIT(A) wrongly deleted the addition made by the AO by accepting the break of the amount paid. Finally the ld.
The Ld. A.R., per contra, submitted before the Bench that it is stated in form No.3CB that Rs.50 lakhs was paid to the office of the Income Tax Department which has been shown under the head miscellaneous expenditure classified under assets in the balance sheet of the assessee. The Ld. A.R. also submitted that the said amount represented the outflow from the books of the company and not income, therefore, it was not a cash credit as has been observed by the AO and thus the finding of the AO was totally out of place and erroneous. The Ld. A.R. submitted that Rs.50 lakhs was paid on 4 dates namely Rs.10 lakhs on 20.02.10, Rs.10 lakhs on 24.02.10, Rs.15 lakhs on 02.03.10 and Rs.15 lakhs on 08.03.10. The Ld. A.R. while referring to the classification of the amount of Rs.50 lakhs in the cash book submitted that it was shown under the head miscellaneous expenditure which was further classified under the current assets in the balance sheet and was charged to the profit and loss account. The Ld. A.R. submitted that the assessee has filed all these evidences before the Ld. CIT(A) under rule 46A . It was also stated that no loan was raised to build up the cash balance to enable the payment. The Ld. A.R. also stated that the assessee has not claimed any deduction of the said amount of Rs.50 lakhs in the profit and loss account, therefore no addition could be made in respect of Rs.50 lakhs which was rightly deleted by the Ld. CIT(A). The Ld. A.R. relied upon the decision of Tribunal in the case of ITO vs. M/s Growel Energy Co Ltd reported at 33 ITR (Tribunal) 1. The Ld. A.R. also submitted before the Bench that the findings of the AO that there was no cash balance in the books of accounts was factually wrong and incorrect. The Ld. A.R. submitted that the Ld. CIT(A) after calling for a remand report on the additional evidences from the AO wherein the AO has confirmed the facts and requested the Ld. CIT(A) to decide the same on merit. The Ld. A.R. prayed
Having heard the rival submissions and perusing the material on record, we find that in this case the assessee has paid Rs.50 lakhs to the officials of the Income Tax Departament which was shown as miscellaneous expenses under the head current assets and was not charged to the profit and loss account as expense. We also find that the said amount has been paid on 4 dates out of the books of accounts of the assessee. The evidences thereof stood verified by the Ld. CIT(A) who after calling for a remand report on the additional evidences filed by the assessee from the AO. The ld CIT(A) recorded finding of the facts that the amount was paid on 4 dates out of cash book of the assessee and addition as made by the AO under section 68 was wrong. In our considered view, the Ld. CIT(A) has passed very speaking order which does not require inference at our end. Moreover, the case of the assessee is squarely covered by the decision of the co-ordinate bench of the Tribunal in the case of ITO vs. M/s Growel Energy Co Ltd. (supra) wherein it has been held that no addition could be made where the assessee has not claimed the said amount of addition as business expenditure which was added to capital work in progress.Accordinly the ground raised by the revenue is dismissed.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 21.03.2018.